Kel Richards writes:

“Hunk dory” means everything if fine, or satisfactory, or okay. It’s a slang term of American origin, and it’s earliest recorded usage is from 1866. Mind you, that’s in a book about American language, so, clearly, it was part of the oral culture well before that date. A little early the word “hunky” on its own was used to mean much the same: “fine, satisfactory, okay”. This comes from an old Dutch word honk – used in games to mean “home base”. So in children’s games this would be used in the sense of “to reach hunk” or to be on hunk”. Then there was a metaphorical extension of the term from game playing to any activity. So use, “to be hunk” was to be safe, or in a good position, or all right. When this was extended to “hunky dory” the dictionaries say they don’t know where the second term came from. My guess is that it became popular because spoken English likes that sort of rhythmical expression. As early as 1866 one American lexicographer wrote: “I cannot conceive on theory of etymology… why anything that is ‘hunkee doree’… should be so admirable”. Here’s a guess: if “hunky” comes “hunk” meaning “home” might “dory” comes from “door” (meaning the entrance to a home)? It’s just a suggestion.
http://www.abc.net.au/classic/breakfast/stories/s958961.htm